Thursday, August 04, 2011

Unlikely Partnership Cuts $20 Million in Health Care Costs

A collaboration of 3 health care "rivals" shaved more than $20 million in costs last year and prevented an insurance rate hike for public sector workers in Northern California, according to an article in the Los Angeles Times.

Driven by a mutual interest to cut costs and to be more competitive, Blue Shield of California, Catholic Healthcare West, and Hill Physicians Medical Group began planning their experiment in early 2008. Their talks centered on 41,500 members of a Blue Shield HMO who were served by Hill Physicians, whose physicians are affiliated with Catholic Healthcare West, the state's largest hospital chain.

They started by sharing "closely guarded financial and medical information" that revealed a handful of elective procedures—including weight-control measures—were among the biggest cost drivers. The partners took action to cut these costs by, for example, encouraging patients to enroll in a Hill Physicians weight-loss program in which a psychotherapist and dietitian teach how to manage food cravings and make healthier eating choices.

The groups also targeted emergencies and expensive repeat visits.

Of the $20 million in savings, Blue Shield recouped $15.5 million for a pledge it had made to the California Public Employees' Retirement System not to increase insurance rates for the 41,500 people in the experiment. The remaining $5 million was divided among the 3 partners. They also had agreed to share the risk if the experiment didn't pay off.

Although skeptics worry that the partnership and others like it will put cost-cutting ahead of patient care, health care experts believe that these types of "experiments" hold important lessons for an expected wave of similar accountable care organizations, says the article.